How To Settle Your Debts in Kansas

Collect the Details About Your Debts

An important factor in deciding your best debt relief option is to know your credit score. You can get this score from the credit bureaus (e.g. Experian, Equifax, and TransUnion) at the same time that you pull your free credit report. Credit scores can be low or high depending on many factors, including making payments on time and the balances you carry on your accounts. If your credit score is good or excellent, you may benefit from choosing an option different from a debt settlement because debt settlement will negatively affect your score. If your score is low, then debt settlement may be a good debt-relief option for you. By reviewing your credit report, you will learn your payment history and whether you have late or missed payments. You can also use your report to evaluate which debts may be good candidates for settlement. While you’re gathering this information, also review recent bank account statements to see what you pay on bills each month. Your two most recent credit card and other statements like car loans, federal student loans will show your current balances, interest rates, and monthly payments. This information will be invaluable when you speak with a credit counselor about your situation and when you construct a budget. 

Collect Details About Your Ability to Settle Your Debts

If you don’t already have a monthly budget, you will need to make one to see if you’re in a financial position to settle your debts. In your budget, list the income you earn from a job or from payments you receive monthly like Social Security or veteran’s benefits. If you earn a paycheck, look at your two most recent paycheck stubs to see how much you make each month and how often you get paid. Some Kansas consumers may get paid every two weeks while others may get paid on specific dates twice a month like the 15th and 30th. This information will help you determine when to schedule a debt settlement payment or set of payments. 

Your budget should also include the expenses you incur each month and regularly (but not necessarily monthly). Some expense amounts will vary, like gas and food. Others, such as your car insurance or rent, have the same payment due each month. Include all of these in your budget, along with any expenses you pay every so often (e.g. annual car registration). To complete a debt settlement successfully, you will either need to have funds available immediately or will need to have money left over in your budget each month to set aside for settling with your creditors. Putting together an accurate budget will help you determine whether you can afford to settle your debts in either way. 

Learn About the Costs to Settle Your Debts in Kansas

There are costs associated with debt settlement. If you choose to work with a Kansas debt settlement company, they will negotiate with your creditors to accept less than the full amount on the debt you owe. This service is not free. A Kansas debt settlement company can charge anywhere from 8% to 15% of your total debt amount in exchange for their services. There is usually an initial set up fee which can be up to $50. Typically, the company will ask you to put money into a separate bank account that they will use to make the settlement payments to your creditors. This bank account may cost money to set up. Finally, as you or a debt settlement company works to secure compromises with your creditors, you will accrue fees and penalties on your account for as long as your account remains delinquent and unsettled. 

Decide Whether to Work with a Kansas Debt Settlement Company

Maybe you have good computer skills, and are organized, and don’t mind negotiating with your creditors. If so, you don’t need to work with a Kansas debt settlement company if you don’t want to. Not using a debt settlement company can save you money and put you in control of the settlement process. However, consider that a Kansas debt settlement company has experience and information that you don’t. They typically know what terms creditors will accept and what they won’t. If you are settling your debts alone and run into issues, there will be no one there to assist you. So carefully weigh the options of going it alone or using a company. Both approaches have advantages and disadvantages, so choose the option that makes the most sense for you. 

Research Kansas Debt Settlement Companies

Finding a trustworthy debt settlement company takes time. You’ll need to research your options carefully to avoid scams. There are red flags to look for when you start your search, including overly optimistic phrases such as “new government programs” and “pennies on the dollar.”  Avoid companies making guarantees or asking for fees before they settle your debts. Go to the Kansas consumer protection division in the attorney general’s office to see any settlement company complaints have been filed against operations you’re interested in working with. The Better Business Bureau in Kansas is also another resource you can use to research the reputation of any given debt settlement company. Trustworthy companies will have no problem explaining in detail the benefits and risks of debt settlement. They will also provide you with honest information about their services and fee structure upfront. Your credit counselor may be able to recommend a particular company in your area for your consideration.

How to Make Your Debt Settlement Work

Unless you can pay your creditors lump sum payments to settle your debts immediately, you’ll likely need to make 2-4 installment payments to a debt settlement company before you can fund acceptable offers. If you are using a debt settlement company, you will give them the funds which they can place in a bank account while they negotiate settlements with each creditor. So, for your debt settlement plan to be successful, you will need to stay current with your monthly payments for the entire term of repayment. Planning ahead will help make your debt settlement work. Budget for emergencies so they don’t interfere with keeping your payments current. You might use a credit card for emergencies or savings. Schedule your monthly payment so that it is not due at the first of the month when your rent or mortgage payment is due. A good rule is to make the debt settlement payment due on the 16th if you get paid on the 15th and 30th each month. Your plan for success should also include making extra payments if you come into money from birthday gifts or an income tax refund. Making this sacrifice will lead to being debt-free sooner.

Alternatives to Debt Settlement

A debt settlement may not be in your best interest, depending on your specific financial situation. If you have little or no money available to fund settlements after paying your expenses each month, then it is important to consider debt management and debt relief alternatives.